Manufacturers are becoming more collaborative with their suppliers, they’re thinking about the increasing risks their supply chains face and they are making more sophisticated products in India and China, according to the “Global Manufacturing Outlook” survey by KPMG, a global firm that provides tax, audit and advisory services.
KPMG surveyed 196 manufacturing executives around the world for the report, all with roles in supply chain management in companies in the aerospace, metals, engineering and related industries.
The survey was presented last week by KPMG and Marquette University to a panel of manufacturers in Milwaukee.
While the manufacturing sector has seen a significant rebound from the global recession, many within the sector are reluctant to make large investments because of risks, said Jeff Dobbs, global and U.S. head of diversified industrials with KPMG.
While there is no clear risk-mitigating strategy that all manufacturers have adopted, many are now looking at their suppliers differently, Dobbs said.
“One of the big things that came out of the survey was that we’ve got to operate differently with our suppliers, we’ve got to be a lot more collaborative,” he said. “We can’t beat the daylight out of them anymore. We’ve got to count on them for various aspects of the manufacturing cycle from product innovation to supply chain agility.”
Instead of just worrying about cost, quality reliability within the supply chain, many manufacturers have started thinking about global risks like weather, labor relations and international conflict.
“It’s Icelandic volcanoes, longshoremen striking, patent infringement, regulatory risks, tax risks and free trade policies,” Dobbs said. “There are a lot more risks to a supply chain than we’ve historically focused on. And while there weren’t any real ‘Ah-has’ in terms of what people are focused on, they’re saying that risk is on the top of the radar screen."
China and India have become more than just centers for low-cost manufacturing for some global companies. The survey showed that a significant percentage of global manufacturers are willing to source research and development and the manufacturing of goods where important intellectual property is involved has increased to 29 and 33 percent, respectively.
“If you would have looked at the survey three years ago, it would have been zero percent,” Dobbs said. “No one would have ever done product innovation or R&D in India or China. Many really sophisticated companies are saying they’ll make it in China if they’re selling it in China.”
However, there are limits to what companies are willing to do in those emerging markets, Dobbs said.
“It’s going to be a long time until you see a car made in China and shipped to the U.S.,” he said.
The survey results represent the significant opportunity to many Milwaukee-area manufacturers, said Mark Cotteleer, associate professor in Marquette’s College of Business Administration, because many global manufacturers are placing higher priority on quality and flexibility within the supply chain.
“Where I really think there is opportunity is in figuring out how to be flexible and responsive,” he said. “If we can do that, then you can go to a big customer and say ‘I know you can get a lot of these parts cheap in China, but we can do the assembly here. Or you can import them in some raw state and we can finish them here to your specific needs and we can do that quickly, with quality and we can do it flexibly.”
To read the survey, visit:
http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/diversified-industrials-publication/Pages/Global-Manufacturing-Outlook.aspx
